It’s amazing that most people will spend hours online to save money on their annual insurance policies, use shopping dockets or drive to another post code to save a few cents off their petrol, or even try to save money by sacrificing one of life’s little pleasures of a buying a coffee. All this, and yet most Australian’s don’t think about reviewing their home loan, one of life’s big household expenses!
Some research was conducted by Aussie, another Mortgage Broking company that is slightly larger than “The Loans Analyst” who has more resources and money to spend on surveying 1,037 Australian Home Owners. They found that 45% have never refinanced their home loans. While 53% had refinanced, but on average they refinanced more than two and half years ago. The other 2% for those that love statistics, were unsure if they had refinanced or not.
They also found on average, you could save around $240 per month if you refinanced. That’s a saving of $2,880 per year in interest costs each year to be made. That’s around two – three years’ worth of daily takeaway coffees. Remember this is an average saving.
Let me share a real life example of how much money I saved a client that settled recently.
These clients had been with their bank for the last 3 years. It was one of the big 4, but I can’t say “which bank”. They had a home loan of $740,000. They were sick and tired of paying more than they should on their home loan, and were feed up with the terrible customer service they had experienced recently. So they contacted me to see if I could help out and see what deals were available in the market. An advantage of being a mortgage broker is that I don’t just deal with one bank, but have access to lots of banks that offer special rates and deals from time to time.
I found a lender with a low variable rate and offered a total banking solution. This included an everyday banking with, a 100% offset account. The 100% offset account will also help them pay less interest on their home loan over the life of the loan.
By switching to another lender they will save 0.77% in interest repayments each year. Which in dollar terms is a saving of $474 per month or $5,698 per year. Over the next 5 years that equates to $28,490 or $56,980 over 10 years.
These are real life savings to be made. I would rather see this extra money in your savings account, pay off your home loan faster or used for your enjoyment rather than just giving the money to the banks!
What would you do with an extra $474 per month or $5,698 per year?
Have a think about it for one minute, that’s real money, not monopoly money. How long would you have to work to earn that money? How long would it take you to save that money? What would you need to give up to save that money?
What if all it took was a 5 – 10-minute phone call with me, to see if I can help out. I should be able to tell you straight away if it’s worthwhile refinancing or staying put.
If I can help you out, I will let you know what needs to be done next. It will most likely involve completing a short application and getting together some documents which shouldn’t take more than 30 mins. The Loans Analyst is conveniently located in the city to catch up and go through some options. Otherwise we can organise a time and place to suits you, if you are within 25Km of the Sydney CBD.
What’s even better you don’t have to deal with the bank or lender, your Loans Analyst will help you prepare the application form, gather all the information, deal with the bank on your behalf, and yes, our staff will wait on hold with the banks however long it takes to get an update, so you don’t have to.
If you have had a mortgage for 3 or more years, I am not promising you I will get you exactly an extra $474 per month in your bank account, but I am confident that in this extremely competitive home loan market I can get you a better deal that what you are currently on.
Before you give up on your daily coffee contact me to find out if refinancing is for you. That way you can still enjoy life’s little pleasures, guilt free!
P.s If it’s been more than 3 years since you took out your loan and you’re happy helping our banks add to their billion dollar profits, then there’s no need to contact me.
Theo Angelopoulos is the Director and Founder of The Loans Analyst. A boutique mortgage broking advice firm based in the Sydney CBD that helps clients to buy property, provide strategic loan structuring advice and making sure you don’t pay more for your home loan than you should.
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